where a closely related lease agreement and lease rider were read as one contract.
How later courts described this case
- where a closely related lease agreement and lease rider were read as one contract.
- also cited by Stokes
Written by the judges who cited it.
The opinion
No. 14607
INTHESwREBEmUfiTOFTHEsrmOFMX;1TANA
1979
HUBEEiT C. RUMPH and MARGEW RUMPH,
Plaintiffs and Respondents,
-vs-
DALF: INC. , a Pbntana Corporation,
Defendants and Appellants.
Appeal f m : District Court of the Sixteenth Judicial ~istrict,
Homrable Alfred B Coate, Judge presiding.
.
Counsel of Record:
For Appellants:
Sandall & Cavan, Billings, Mntana
John R Carr, Miles City, Mntana
.
For Respondents:
Lucas and hbnaghan, Miles City, mntana
Submitted on briefs: April 25, 1979
Filed: JUN 6 1979
Mr. J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion of
t h e Court.
The c o n t r o l l i n g i s s u e i n t h i s a p p e a l i s t h e p r o p r i e t y
o f t h e D i s t r i c t C o u r t ' s d e c i s i o n t o g r a n t summary judgment
i n f a v o r of r e s p o n d e n t s . A s e v i d e n c e d by t h e D i s t r i c t C o u r t
f i l e and t h e p a r t i e s ' b r i e f s h e r e i n , w e f i n d t h a t a b s o l u t e l y
no g e n u i n e i s s u e s o f m a t e r i a l f a c t a r e p r e s e n t i n t h i s
l a w s u i t and t h a t r e s p o n d e n t s a r e e n t i t l e d t o judgment a s a
m a t t e r of law.
The p u r p o s e of t h i s a p p e a l i s t o d e t e r m i n e t h e r i g h t f u l
owner of a s m a l l r a n c h l o c a t e d a d j a c e n t t o t h e Powder R i v e r
n e a r Broadus, Montana. For many y e a r s p r i o r t o September
22, 1965, t h i s r a n c h , which c o n s i s t s o f a p p r o x i m a t e l y 523
acres of l a n d and a r e s i d e n c e , w a s owned by R. C . Hubbard of
Broadus, Montana. Hubbard, who i s now d e c e a s e d , was n o t
l i v i n g on h i s r a n c h i n t h e s p r i n g of 1965. H e allowed
H u b e r t Rumph, o n e o f t h e r e s p o n d e n t s h e r e i n , t o move o n t o
t h e ranch t h a t spring. A f o r m a l l e a s e agreement, d a t e d
September 22, 1965, was l a t e r e x e c u t e d by Hubbard and Rumph.
T h i s lease agreement p r o v i d e d f o r a t e r m o f f i v e y e a r s from
and a f t e r A p r i l 1, 1965. The a n n u a l c o n s i d e r a t i o n f o r t h e
l e a s e of t h e p r o p e r t y w a s $523 o r $1.00 p e r acre. The l e a s e
agreement c o n t a i n e d t h e f o l l o w i n g p r o v i s i o n g r a n t i n g Rumph
t h e exclusive option t o purchase t h e property:
" T h a t t h e L e s s o r d o e s hereby g i v e and g r a n t t o
t h e Lessee, h i s h e i r s , executors, a d m i n i s t r a t o r s
and a s s i g n s , t h e e x c l u s i v e r i g h t , p r i v i l e g e and
o p t i o n of p u r c h a s i n g t h e h e r e i n a b o v e d e s c r i b e d
r e a l p r o p e r t y f o r t h e sum o f Twenty Seven Thous-
s a n d F i v e Hundred D o l l a r s ($27,500.00). That
t h i s o p t i o n may b e e x e r c i s e d by t h e L e s s e e a t
any t i m e a f t e r A p r i l 1, 1968 and n o t l a t e r t h a n
A p r i l 1, 1970, by g i v i n g w r i t t e n n o t i c e t o t h e
Lessor within t h e t i m e s e t f o r t h h e r e i n f o r t h e
e x e r c i s e of t h i s o p t i o n . T h a t s a i d n o t i c e s h a l l
b e s e n t by r e g i s t e r e d m a i l t o t h e L e s s o r a t
Broadus, Montana."
I n F e b r u a r y 1969, Rumph d e c i d e d t o e x e r c i s e h i s o p t i o n
t o purchase t h e property. T h i s d e c i s i o n was d u l y communi-
c a t e d t o Hubbard who a c q u i e s c e d t o t h e p l a n n e d s a l e .
Hubbard and Rumph concluded t h a t t h e s a l e c o u l d n o t be
completed i n F e b r u a r y 1969. Both Hubbard and Rumph became
concerned w i t h t h e p o s s i b i l i t y t h a t t h e s a l e c o u l d n o t be
completed p r i o r t o A p r i l 1, 1970, t h e e x p i r a t i o n d a t e of t h e
o p t i o n t o p u r c h a s e found i n t h e l e a s e agreement. Therefore,
o n F e b r u a r y 1 3 , 1969, Hubbard and Rumph m e t a t t h e Hubbard
home t o r e s o l v e t h i s problem. I t was m u t u a l l y a g r e e d t h a t
t h e b e s t way t o s o l v e t h e problem w a s t o e x t e n d t h e l e a s e
and o p t i o n t o p u r c h a s e f o r a n a d d i t i o n a l t e n y e a r s . During
t h i s c o n v e r s a t i o n , Rumph made n o t e s of t h e p a r t i e s ' under-
standings. L a t e r t h a t e v e n i n g , h i s w i f e Margery p r e p a r e d a
document e n t i t l e d " l e a s e r i d e r " a c c o r d i n g t o t h e m u t u a l l y
a g r e e d upon t e r m s .
The f o l l o w i n g day t h e Rumphs r e t u r n e d t o t h e Hubbard
home t o e x e c u t e t h e l e a s e r i d e r . Bonnie Rumph, a Notary
P u b l i c , accompanied them t o n o t a r i z e t h e s i g n a t u r e s .
Hubbard and Rumph t h e n examined t h e l e a s e r i d e r t o
c o n f i r m t h a t i t p r o p e r l y r e f l e c t e d t h e agreement r e a c h e d t h e
p r e v i o u s day. One s i g n i f i c a n t change c o n t e m p l a t e d by t h e
p a r t i e s w a s a n i n c r e a s e i n t h e a n n u a l l e a s e payment from
$523 t o $623.
The l e a s e r i d e r p r o v i d e s i n p e r t i n e n t p a r t t h a t :
". . . t h i s lease s h a l l r u n f o r t e n ( 1 0 ) more
y e a r s , e x p i r i n g on A p r i l 1, 1980, i n s t e a d o f
A p r i l 1, 1970."
The Rumphs' o p t i o n t o p u r c h a s e t h e p r o p e r t y was e x t e n d e d
u n t i l A p r i l 1, 1980, by t h e f o l l o w i n g l a n g u a g e of t h e Lease
rider:
" T h a t t h e l e s s e e , H u b e r t C. Rumph and/or Margery
Rumph, h a s t h e o p t i o n t o renew t h i s lease a s
w e l l a s t h e o p t i o n t o buy."
¾ he sum o f $523 was p a i d t o Hubbard f o r t h e y e a r s 1965
t h r o u g h 1969. Pursuant t o t h e t e r m s of t h e l e a s e r i d e r , t h e
c o n s i d e r a t i o n p a i d i n 1970 and a l l s u b s e q u e n t y e a r s w a s
i n c r e a s e d t o $623.
R. C . Hubbard d i e d o n J a n u a r y 7, 1971. A t t h e t i m e of
h i s d e a t h , t h e p r o p e r t y i n q u e s t i o n had n o t y e t been con-
veyed t o t h e Rumphs. F o r economic r e a s o n s , t h e d e c i s i o n w a s
made by t h e a t t o r n e y and t h e a d m i n i s t r a t o r o f H u b b a r d ' s
e s t a t e t o sell t h e property a t a public sale. The a d m i n i s t r a -
t o r ' s s a l e was d u l y and p r o p e r l y c a r r i e d o u t .
The n o t i c e of s a l e o f r e a l p r o p e r t y was d u l y p u b l i s h e d .
That n o t i c e s t a t e d i n p e r t i n e n t p a r t t h a t : "Ranch s u b j e c t
t o s u r f a c e l e a s e t o H. C. Rumph." While no r e f e r e n c e was
made i n t h e n o t i c e t o r e s p o n d e n t s ' i n t e r e s t , t h e p u r c h a s e r
w a s aware of h i s i n t e r e s t .
The a d m i n i s t r a t o r ' s s a l e was c o n d u c t e d i n t h e c o u r t r o o m
o f t h e Powder R i v e r County c o u r t h o u s e on O c t o b e r 27, 1972.
P r i o r t o t h a t d a t e , Rumph s p o k e w i t h t h e a t t o r n e y f o r t h e
e s t a t e , R o b e r t J. Brooks, and was a s s u r e d by Brooks t h a t t h e
p u r c h a s e r a t t h e a d m i n i s t r a t o r ' s s a l e would t a k e t h e l a n d
s u b j e c t t o Rumphs' l e a s e and o p t i o n t o p u r c h a s e . The
r e c o r d a l s o r e f l e c t s t h a t D a l e Edwards, t h e p r e s i d e n t o f t h e
a p p e l l a n t c o r p o r a t i o n , D a l e Edwards, I n c . , a l s o spoke w i t h
Brooks p r i o r t o t h e s a l e . I n a d d i t i o n , Edwards was p r o v i d e d
w i t h a copy o f b o t h t h e l e a s e a g r e e m e n t and l e a s e r i d e r
p r i o r t o t h e date of t h e sale.
P r i o r t o t h e s a l e , o r a l announcements w e r e made by t h e
a t t o r n e y f o r t h e e s t a t e t o t h e e f f e c t t h a t t h e s a l e was
s u b j e c t t o t h e Rumphs' l e a s e and o p t i o n t o p u r c h a s e . Copies
o f t h e lease a g r e e m e n t and l e a s e r i d e r w e r e c i r c u l a t e d among
p r o s p e c t i v e purchasers a t t h e sale. Q u e s t i o n s w e r e asked
r e g a r d i n g t h e v a l i d i t y o f t h e lease and o p t i o n t o p u r c h a s e
and Brooks d e f e r r e d h i s a n s w e r s t o o t h e r a t t o r n e y s who w e r e
p r e s e n t and r e p r e s e n t i n g p r o s p e c t i v e b i d d e r s . These f a c t s
i n d i c a t e i t was u n n e c e s s a r y t o i n c l u d e i t i n t h e n o t i c e f o r
sale. P u r c h a s e r had ample n o t i c e .
The p r o p e r t y was p u r c h a s e d by D a l e Edwards, on b e h a l f
o f D a l e Edwards, I n c . The p u r c h a s e p r i c e was $21,173.40,
which was 90 p e r c e n t o f t h e a p p r a i s e d v a l u e o f t h e p r o p e r t y .
Subsequent t o t h e s a l e , b u t p r i o r t o t h e a c t u a l c l o s i n g ,
Edwards' a t t o r n e y , M r . C a r r , r e v i e w e d a n a b s t r a c t of t i t l e
t o t h e property. C e r t a i n t i t l e work had t o b e done i n c l u d -
i n g t h e a c q u i s i t i o n o f a q u i t c l a i m deed from a M r . Dahl,
who h e l d a l i e n o n t h e p r o p e r t y . Considerable d i f f i c u l t y
w a s e n c o u n t e r e d by Brooks and C a r r i n o b t a i n i n g t h i s d e e d
from Dahl. I n f a c t , a t o n e p o i n t , c a s h c o n s i d e r a t i o n was
o f f e r e d t o Dahl f o r t h e d e e d . A t no t i m e was any q u e s t i o n
r a i s e d a s t o t h e v a l i d i t y o f t h e Rumphs' l e a s e and o p t i o n t o
purchase.
The Rumphs have been i n c o n t i n u o u s p o s s e s s i o n o f t h e
p r o p e r t y s i n c e A p r i l 1965. They have performed a l l o f t h e i r
o b l i g a t i o n s u n d e r b o t h t h e l e a s e a g r e e m e n t and t h e lease
rider. No n o t i c e o f d e f a u l t h a s e v e r been s e r v e d upon t h e
Rumphs by D a l e Edwards, I n c . , a s r e q u i r e d f o r any b r e a c h o f
t h e l e a s e agreement. A l l a n n u a l lease payments h a v e been
made by t h e Rumphs t o D a l e Edwards, I n c . , by c a s h i e r ' s
checks.
On March 1 5 , 1977, p u r s u a n t t o t h e t e r m s of t h e l e a s e
a g r e e m e n t and l e a s e r i d e r , t h e Rumphs e x e r c i s e d t h e i r o p t i o n
t o p u r c h a s e t h e p r o p e r t y f o r t h e sum o f $27,500. Dale
Edwards, I n c . , r e f u s e d t o perform under t h e l e a s e agreement
and l e a s e r i d e r and w i l l n o t convey t h e p r o p e r t y t o t h e
Rumphs. The amount of $27,500, r e p r e s e n t i n g f u l l payment
f o r t h e p r o p e r t y , h a s been t e n d e r e d t o t h e C l e r k of t h e
Powder R i v e r County D i s t r i c t C o u r t by means of a n i r r e v o k -
a b l e l e t t e r of c r e d i t .
T h i s s u i t f o r s p e c i f i c performance f o l l o w e d Edwards'
r e f u s a l t o convey t h e p r o p e r t y t o t h e Rumphs. Summary
judgment i n f a v o r of t h e Rumphs was e n t e r e d by t h e D i s t r i c t
C o u r t from which D a l e Edwards, I n c . , a p p e a l s t o t h i s C o u r t .
Before considering t h e i n d i v i d u a l i s s u e s , w e w i l l
d i s c u s s t h e v a l i d i t y of t h e D i s t r i c t C o u r t e n t e r t a i n i n g
summary judgment motions i n t h i s m a t t e r .
Rule 5 6 ( c ) , M.R.Civ.P., p r o v i d e s t h a t summary judgment
i s proper i f :
". . . t h e p l e a d i n g s , d e p o s i t i o n s , answers t o
i n t e r r o g a t o r i e s , and a d m i s s i o n s on f i l e , t o g e t h e r
w i t h t h e a f f i d a v i t s , i f any, show t h a t t h e r e i s
no g e n u i n e i s s u e a s t o any m a t e r i a l f a c t and t h a t
t h e moving p a r t y i s e n t i t l e d t o a judgment a s a
m a t t e r of law."
Thus, summary judgment i s a p p r o p r i a t e when t h e moving
p a r t y shows a complete a b s e n c e of any g e n u i n e i s s u e a s t o
a l l f a c t s which a r e m a t e r i a l i n l i g h t o f t h o s e s u b s t a n t i v e
p r i n c i p l e s which e n t i t l e him t o a judgment a s a m a t t e r of
law. H a r l a n d v . Anderson ( 1 9 7 6 ) , 169 Mont. 447, 548 P.2d
613. T h i s C o u r t h a s c o n s i s t e n t l y h e l d t h a t , under Rule 5 6 ,
t h e p a r t y moving f o r summary judgment h a s t h e i n i t i a l burden
o f e s t a b l i s h i n g t h e complete a b s e n c e of any g e n u i n e i s s u e o f
material f a c t . Mustang Beverage Co., Inc. v. Jos. S c h l i t z
Brewing Co. ( 1 9 7 3 ) , 162 Mont. 243, 511 P.2d 1. To s a t i s f y
i t s burden t h e moving p a r t y must make a showing t h a t i s
q u i t e c l e a r of what t h e t r u t h i s , and e x c l u d e any r e a l d o u b t
a s t o t h e e x i s t e n c e of any g e n u i n e i s s u e o f m a t e r i a l f a c t .
Kober v . S t e w a r t ( 1 9 6 6 ) , 148 Mont. 1 1 7 , 417 P.2d 476.
The primary p o l i c y and g e n e r a l p u r p o s e u n d e r l y i n g Rule
56 i s t o encourage j u d i c i a l economy t h r o u g h t h e prompt
e l i m i n a t i o n of q u e s t i o n s n o t d e s e r v i n g of r e s o l u t i o n by
trial. S i l l o w a y v . J o r g e n s o n ( 1 9 6 5 ) , 146 Mont. 307, 406
While t h e i n i t i a l burden of proof must a t t a c h t o t h e
moving p a r t y , t h a t burden s h i f t s where t h e r e c o r d d i s c l o s e s
no g e n u i n e i s s u e o f m a t e r i a l f a c t . Under t h e s e circum-
s t a n c e s , t h e p a r t y opposing t h e motion must come f o r w a r d
with s u b s t a n t i a l evidence r a i s i n g t h e i s s u e . Rickard v.
P a r a d i s ( 1 9 7 5 ) , 167 Mont. 450, 539 P.2d 718; Roope v . Ana-
conda Company ( 1 9 7 2 ) , 159 Mont. 28, 494 P.2d 922; F l a n s b e r g
v . Montana Power Company ( 1 9 6 9 ) , 154 Mont. 53, 460 P.2d 263.
Once t h e burden h a s s h i f t e d , t h e p a r t y o p p o s i n g t h e motion
i s h e l d t o a s t a n d a r d o f proof which i s a s s u b s t a n t i a l a s
t h a t i n i t i a l l y imposed upon t h e moving p a r t y . Harland v .
Anderson, s u p r a .
T h i s s t a n d a r d o f proof w a s c l e a r l y d e f i n e d i n S i l l o w a y
v . J o r g e n s o n , 146 Mont. a t 310, 406 P.2d a t 169, where t h i s
Court s t a t e d :
t h e p a r t y opposing [ t h e ] motion must
p r e s e n t f a c t s i n p r o p e r form--conclusions of
l a w w i l l n o t s u f f i c e ; and t h e o p p o s i n g p a r t y ' s
f a c t s must b e m a t e r i a l and of a s u b s t a n t i a l
n a t u r e , n o t f a n c i f u l , f r i v o l o u s , gauzy, n o r
merely s u s p i c i o n s . ' "
W e find t h a t a l l facts material t o the legal issues
i n v o l v e d i n t h i s a p p e a l have been p r e s e n t e d . There a r e no
g e n u i n e i s s u e s of f a c t . The p a r t i e s concede t h a t no i s s u e s
of f a c t e x i s t i n t h i s c a s e .
The i n d i v i d u a l i s s u e s p r e s e n t e d t o t h i s C o u r t a r e :
1. Did t h e D i s t r i c t C o u r t p r o p e r l y c o n s t r u e and i n t e r -
p r e t t h e t e r m s of t h e l e a s e agreement and l e a s e r i d e r ?
2. Did t h e D i s t r i c t C o u r t err i n i t s a d o p t i o n of c e r -
t a i n o r a l testimony concerning t h e circumstances of t h e
e x e c u t i o n of t h e l e a s e r i d e r ?
3. Did t h e D i s t r i c t C o u r t err i n h o l d i n g t h a t respon-
d e n t s ' o p t i o n t o p u r c h a s e w a s n o t e x t i n g u i s h e d by t h e t e r m s
o f s e c t i o n 67-408, R.C.M. 1947, now s e c t i o n 70-26-207 MA
C ?
4. Did a p p e l l a n t waive i t s r i g h t t o c o n t e s t t h e
v a l i d i t y o r e x i s t e n c e of t h e o p t i o n t o purchase?
The f i r s t i s s u e c o n c e r n s t h e c o n s t r u c t i o n and i n t e r -
p r e t a t i o n of t h e l e a s e agreement and lease r i d e r . Both
p a r t i e s i n d i c a t e t h a t a p r i m a r y q u e s t i o n t o b e answered h e r e
i s "what d o t h e t e r m s of t h e c o n t r a c t p r o v i d e ? " W e agree.
The i n t e n t of t h e p a r t i e s t o t h e c o n t r a c t s i s d e t e r -
mined by r e a d i n g t h e l e a s e agreement and l e a s e r i d e r i n
full. Appellant chooses t o d i s s e c t t h e c o n t r a c t s , t a k e s
c e r t a i n i s o l a t e d words and p h r a s e s from them, and a r g u e s
t h a t t h e s e minute p i e c e s express t h e t r u e i n t e n t of t h e
p a r t i e s r a t h e r t h a n a n a n a l y s i s of t h e c o n t r a c t s i n f u l l .
W e f i n d t h a t t h e i n t e n t of t h e c o n t r a c t s i s c l e a r . The
Rumphs were g r a n t e d t h e o p t i o n t o p u r c h a s e t h e p r o p e r t y i n
q u e s t i o n which w i l l , by i t s t e r m s , e x p i r e on A p r i l 1, 1980.
I n i t i a l l y , it i s important t o note t h a t t h e l e a s e r i d e r
i s m e r e l y a n e x t e n s i o n of t h e l e a s e agreement w i t h c e r t a i n
enumerated changes. I n view of t h e c l o s e r e l a t i o n s h i p
between t h e s e documents, t h e y must b e c o n s t r u e d t o g e t h e r t o
d e t e r m i n e t h e t r u e i n t e n t of Hubbard and Rumph r e g a r d i n g t h e
o p t i o n t o purchase. S e c t i o n 13-708, R.C.M. 1947, now s e c -
t i o n 28-3-203 MCA, provides:
"Several c o n t r a c t s r e l a t i n g t o t h e s a m e matters,
between t h e s a m e p a r t i e s , and made a s p a r t s of
s u b s t a n t i a l l y one t r a n s a c t i o n , are t o be taken
together."
Therefore, i n discussing t h e r u l e s of i n t e r p r e t a t i o n ,
t h e two c o n t r a c t s h e r e i n w i l l be r e f e r r e d t o a s o n e .
The f o l l o w i n g r u l e s of c o n s t r u c t i o n a r e c o n t r o l l i n g
upon t h i s C o u r t i n i t s d e t e r m i n a t i o n of t h e i n t e n t of t h e
contract. A c o n t r a c t must b e c o n s t r u e d a c c o r d i n g t o t h e
i n t e n t i o n of t h e p a r t i e s t o t h e c o n t r a c t a t t h e t i m e of
contracting. S e c t i o n 13-702, R.C.M. 1947, now s e c t i o n 28-3-
301 MCA; Brown v . G r i f f i n ( 1 9 6 8 ) , 150 Mont. 498, 436 P.2d
695. The language of a w r i t t e n c o n t r a c t g o v e r n s i t s i n t e r -
p r e t a t i o n i f t h e l a n g u a g e i s c l e a r and e x p l i c i t and d o e s n o t
i n v o l v e an a m b i g u i t y . S e c t i o n 13-704, R.C.M. 1947, now
s e c t i o n 28-3-401 MCA. I n t h e e v e n t of a n a m b i g u i t y , s e c -
t i o n s 13-702 and 13-713, R.C.M. 1947, now s e c t i o n s 28-3-301
and 28-3-402 MCA, e x p l i c i t l y a l l o w t h e i n t r o d u c t i o n of
e x t r i n s i c e v i d e n c e t o e x p l a i n t h e t r u e i n t e n t i o n of t h e
parties. McNussen v . Graybeal ( 1 9 6 5 ) , 146 Mont. 173, 405
P.2d 447.
An a m b i g u i t y e x i s t s when, t a k e n a s a whole, t h e con-
t r a c t ' s wording o r p h r a s e o l o g y i s r e a s o n a b l y s u b j e c t t o two
different interpretations. SW Company v . Schwenk ( 1 9 7 7 ) ,
-
Mont. , 568 P.2d 145, 34 St.Rep. 865; W i l l i a m s v .
I n s u r a n c e Company of North America ( 1 9 6 7 ) , 150 Mont. 292,
434 P.2d 395. Where t h e t e r m s of a n agreement a r e u n c e r t a i n
and ambiguous, p a r 0 1 e v i d e n c e i s a d m i s s i b l e t o p r o v e t h e
i n t e r p r e t a t i o n meant by t h e p a r t i e s . S u t t o n v . Masterson
( 1 9 3 0 ) , 86 Mont. 530, 284 P . 264. I n a d d i t i o n , where t h e
l a n g u a g e of t h e c o n t r a c t i s d o u b t f u l and ambiguous, t h e
c o n d u c t of t h e p a r t i e s under t h e c o n t r a c t i s one of t h e b e s t
i n d i c a t i o n s of t h e i r t r u e i n t e n t . Brown v . riff in, s u p r a ;
M u s s e l s h e l l V a l l e y Farming & L i v e s t o c k Co. v . Cooley ( 1 9 2 9 ) ,
86 Mont. 276, 283 P. 213.
T h i s C o u r t s t a t e d i n K i n t n e r v . H a r r ( 1 9 6 5 ) , 146 Mont.
461, 472, 408 P.2d 487, 494, t h a t :
". . . I t i s a fundamental r u l e t h a t i n t h e con-
s t r u c t i o n of c o n t r a c t s t h e c o u r t s may l o o k n o t
o n l y t o t h e l a n g u a g e employed, b u t t o t h e sub-
j e c t - m a t t e r and t h e s u r r o u n d i n g c i r c u m s t a n c e s ,
and may a v a i l t h e m s e l v e s of t h e same l i g h t
which t h e p a r t i e s p o s s e s s e d when t h e c o n t r a c t
was made. S e e Merriam v . U n i t e d S t a t e s , 107
U.S. 437, 4 4 1 , S.Ct. 536, 540, 27 L.Ed. 531,
533. To a s c e r t a i n t h e i n t e n t i o n , r e g a r d must
b e had t o t h e n a t u r e o f t h e i n s t r u m e n t i t s e l f ,
t h e c o n d i t i o n of t h e p a r t i e s e x e c u t i n g i t , and
t h e o b j e c t s which t h e y had i n view. The words
employed, i f c a p a b l e o f more t h a n one meaning,
a r e t o be g i v e n t h a t meaning which i t i s ap-
p a r e n t t h e p a r t i e s i n t e n d e d them t o have.
1 Beach on Modern Law o f C o n t r a c t s , 702. See
Smith v . School D i s t r i c t No. 1 8 , 115 Mont. 1 0 2 ,
139 P.2d 518; 1 2 Am J u r , S S 236, 249."
I t i s a w e l l - e s t a b l i s h e d p r i n c i p l e of c o n t r a c t u a l
construction t h a t i n i n t e r p r e t i n g a w r i t t e n instrument, t h e
c o u r t w i l l n o t i s o l a t e c e r t a i n p h r a s e s of t h e i n s t r u m e n t t o
g a r n e r t h e i n t e n t of t h e p a r t i e s , b u t w i l l g r a s p t h e i n s t r u -
ment by i t s f o u r c o r n e r s and i n t h e l i g h t of t h e e n t i r e
i n s t r u m e n t , a s c e r t a i n t h e paramount and g u i d i n g i n t e n t o f
the parties. Mere i s o l a t e d t r a c t s , c l a u s e s and words w i l l
n o t b e a l l o w e d t o p r e v a i l o v e r t h e g e n e r a l language u t i l i z e d
i n t h e instrument. Ward v . Mattuschek ( 1 9 5 8 ) , 134 Mont.
307, 330 P.2d 971; S t e e n v . Rustad ( 1 9 5 7 ) , 132 Mont. 96, 313
P.2d 1014. The words of t h e c o n t r a c t a r e t o be u n d e r s t o o d
i n t h e i r o r d i n a r y and p r o p e r s e n s e . S e c t i o n 13-710, R.C.M.
1947, now s e c t i o n 28-3-501 MCA. P a r t i c u l a r c l a u s e s of t h e
agreement a r e s u b o r d i n a t e t o t h e g e n e r a l i n t e n t of t h e
contract. S e c t i o n 13-716, R.C.M. 1947, now s e c t i o n 28-3-307
MCA. Any r e p u g n a n c i e s i n t h e c o n t r a c t must b e r e c o n c i l e d ,
i f p o s s i b l e , by a n i n t e r p r e t a t i o n which w i l l g i v e some
e f f e c t t o t h e repugnant clauses, subordinate t o t h e general
i n t e n t and p u r p o s e of t h e c o n t r a c t . S e c t i o n 13-718, R.C.M.
1947, now s e c t i o n 28-3-204 MCA. F u r t h e r m o r e , words i n a
c o n t r a c t which a r e i n c o n s i s t e n t w i t h t h e g e n e r a l n a t u r e o f
t h e c o n t r a c t o r t h e main i n t e n t i o n of t h e p a r t i e s a r e t o b e
rejected. S e c t i o n 13-719, R.C.M. 1947, now s e c t i o n 28-3-503
MCA .
One f i n a l r u l e of c o n t r a c t u a l c o n s t r u c t i o n i s i n v o l v e d
herein. I n c a s e of a n a m b i g u i t y , t h e language o f t h e con-
t r a c t i s t o be i n t e r p r e t e d most s t r o n g l y a g a i n s t t h e p a r t y
causing t h e uncertainty t o e x i s t . S e c t i o n 13-720, R.C.M.
1947, now s e c t i o n 28-3-206 MCA. Appellant i n d i c a t e s t h a t
s i n c e Rumph a s s i s t e d i n t h e c o m p o s i t i o n of t h e l e a s e r i d e r
and h i s w i f e typed t h e agreement, t h e agreement s h o u l d b e
c o n s t r u e d most s t r o n g l y a g a i n s t t h e Rumphs. However, t h i s
r u l e of c o n s t r u c t i o n h a s l i t t l e , i f a n y , a p p l i c a b i l i t y i n
t h e i n s t a n t case. The t e s t i m o n y i s u n d i s p u t e d t h a t Rumph
and Hubbard j o i n t l y drew up t h e t e r m s of t h e l e a s e r i d e r .
T h e r e a f t e r , Margery Rumph t r a n s c r i b e d t h e agreement r e a c h e d
i n t o i t s p r e s e n t form. A f t e r t h i s t r a n s c r i p t i o n , b o t h Rumph
and Hubbard reviewed t h e document t o c o n f i r m t h a t i t c o r -
responded t o t h e i r agreement. I t a p p e a r s t h a t any a m b i g u i t y
c r e a t e d was j o i n t l y c r e a t e d and t h a t Rumph s h o u l d n o t a t
t h i s p o i n t be s o l e l y chargeable with t h e ambiguity. It
s h o u l d a l s o be n o t e d t h a t t h e o r i g i n a l l e a s e agreement was
d r a f t e d by a n unknown a t t o r n e y a t t h e r e q u e s t of Hubbard.
I t i s i n t e r e s t i n g t o n o t e t h a t a p p e l l a n t d e v o t e s ap-
p r o x i m a t e l y e i g h t p a g e s o f i t s b r i e f t o a d i s c u s s i o n of t h e
d i f f e r e n c e s between a " l e a s e " and " o p t i o n t o p u r c h a s e . " By
means o f a n e x t r e m e l y t e c h n i c a l and somewhat i m a g i n a t i v e
argument, a p p e l l a n t c o n c l u d e s t h a t t h e u s e and p l a c e m e n t of
t h e words, " l e a s e " and " o p t i o n t o p u r c h a s e " , i n d i c a t e s t h a t
t h e o p t i o n t o p u r c h a s e ended w i t h t h e t e r m of t h e o r i g i n a l
l e a s e agreement and was n o t extended t o A p r i l 1, 1980 by t h e
lease rider. A p p e l l a n t i s p i c k i n g i s o l a t e d words and p h r a s e s
from t h e two c o n t r a c t s and a t t e m p t i n g t o r e b u t t h e i r c l e a r
and c o n v i n c i n g g e n e r a l i n t e n t .
I t c e r t a i n l y i s t r u e t h a t t h e t e r m s " l e a s e " and " o p t i o n
t o p u r c h a s e " have d i f f e r e n t meanings. However, a l l p a r t i e s
i n t e r e s t e d i n t h i s t r a n s a c t i o n w i t h t h e e x c e p t i o n of Dale
Edwards, I n c . , c o n s i d e r e d t h e o p t i o n t o p u r c h a s e t o be a
p o r t i o n of t h e l e a s e . The l e a s e agreement i s t i t l e d j u s t
t h a t : Lease Agreement, n o t Lease Agreement and O p t i o n t o
Purchase. There c e r t a i n l y i s no c o n t e n t i o n , even by Dale
Edwards, I n c . , t h a t t h e o p t i o n t o p u r c h a s e i s n o t a p a r t of
t h a t lease. I n a d d i t i o n , t h e n o t i c e of s a l e i n d i c a t e d t h a t
t h e s a l e was s u b j e c t t o t h e s u r f a c e l e a s e t o Rumph.
T h e r e f o r e , w e f i n d t h a t t h e t e r m " l e a s e " a s found i n
t h e l e a s e r i d e r s h o u l d b e i n t e r p r e t e d t o mean l e a s e and
o p t i o n t o purchase. I f it i s necessary t o d i s s e c t t h e
agreements i n q u e s t i o n t o determine t h e i r t r u e i n t e n t , w e
f i n d t h a t t h i s d i s s e c t i o n i s more a c c u r a t e t h a n t h e one
s u g g e s t e d by a p p e l l a n t .
A p p e l l a n t comments a t l e n g t h on t h e Rumphs' f i n a n c i a l
condition. Appellant i n d i c a t e s t h a t they w e r e unable t o
a r r a n g e f i n a n c i n g f o r t h e p u r c h a s e of t h e l a n d u n t i l a s -
s i s t e d by t h e i r a t t o r n e y . There i s a b s o l u t e l y no e v i d e n c e
i n the record t o support t h i s assertion. In fact, there is
a b s o l u t e l y no c o n c l u s i v e e v i d e n c e c o n c e r n i n g t h e Rumphs'
f i n a n c i a l condition. I n any e v e n t , t h i s e n t i r e d i s c u s s i o n
i s moot i n t h a t t h e money was a v a i l a b l e when t h e Rumphs
u l t i m a t e l y decided t o e x e r c i s e t h e i r option t o purchase.
I n c o n c l u s i o n , when t h i s C o u r t r e a d s t h e l e a s e a g r e e -
and
ment and lease r i d e r i n t o t a l / i n t e r p r e t s them by g r a s p i n g
them by t h e i r f o u r c o r n e r s t o d e t e r m i n e t h e i r o v e r a l l i n -
t e n t , t h e c o n c l u s i o n i s i n e s c a p a b l e t h a t t h e Rumphs' o p t i o n
t o p u r c h a s e s u r v i v e s u n t i l A p r i l 1, 1980.
I s s u e No. 2 i n v o l v e s t h e p r o p r i e t y of c e r t a i n o r a l
testimony. A p p e l l a n t complains t h a t t h e D i s t r i c t C o u r t
e r r e d by i n c o r p o r a t i n g c e r t a i n e v i d e n c e i n t o i t s f i n d i n g s o f
fact. S p e c i f i c a l l y , a p p e l l a n t f i n d s f a u l t w i t h F i n d i n g s Of
F a c t Nos. 3 t h r o u g h 6. A p p e l l a n t ' s a t t a c k i s two pronged,
c l a i m i n g t h a t t h e e v i d e n c e i s i n a d m i s s i b l e f i r s t under t h e
p a r o l e v i d e n c e r u l e and second under t h e r u l e s of e v i d e n c e ,
s p e c i f i c a l l y t h e dead man's s t a t u t e .
W f i n d t h a t t h e e v i d e n c e which i s t h e b a s i s o f Find-
e
i n g s of F a c t Nos. 3 t h r o u g h 5 i s i n a d m i s s i b l e under t h e
p a r o l evidence r u l e . Montana c o u r t s , when c a l l e d upon t o
i n t e r p r e t t h e t e r m s of c o n t r a c t s , have l o n g h e l d t h a t where
t h e t e r m s o f t h e c o n t r a c t a r e c l e a r and unambiguous t h e
c o u r t w i l l n o t allow p a r o l evidence. Safeco Insurance
Company v . Munroe ( 1 9 7 4 ) , 165 Mont. 185, 527 P.2d 64;
Merritt v . Merritt ( 1 9 7 4 ) , 165 Mont. 172, 526 P.2d 1375; and
Kielmann v . Mogan ( 1 9 7 0 ) , 156 Mont. 230, 478 P.2d 275.
W e have h e l d under I s s u e No. 1, however, t h a t t h e l e a s e
agreement and l e a s e r i d e r a r e c l e a r and unambiguous, g i v i n g
r e s p o n d e n t s a l e a s e and o p t i o n t o p u r c h a s e u n t i l ~ p r i 1,
l
1980. The i n t e n t o f t h e p a r t i e s i s c l e a r , and t h e ~ i s t r i c t
C o u r t c o u l d s o f i n d i n i t s F i n d i n g of F a c t No. 6 w i t h o u t t h e
u s e of p a r o l e v i d e n c e .
Appellant f u r t h e r contends t h a t t h e evidence underlying
F i n d i n g s o f F a c t Nos. 3 t h r o u g h 5 i s a l s o i n a d m i s s i b l e under
t h e dead man's s t a t u t e . Because of o u r r u l i n g t h a t t h i s
e v i d e n c e i s i n a d m i s s i b l e under t h e p a r o l e v i d e n c e r u l e , w e
need n o t make a f i n d i n g on t h i s p o i n t . I t s h o u l d be p o i n t e d
o u t , however, t h a t t h e dead man's s t a t u t e , which was f o r -
m e r l y c o d i f i e d a t s e c t i o n 93-701-3(3), R.C.M. 1947, h a s been
a b o l i s h e d by Rule 601, Mont.R.Evid.
I s s u e No. 3 c o n c e r n s p o s s i b l e v i o l a t i o n of s e c t i o n 67-
408, R.C.M. 1947, now s e c t i o n 70-26-207 MCA. Appellant
a l l e g e s t h a t t h e l e a s e r i d e r i s i n v a l i d and v o i d a s b e i n g i n
v i o l a t i o n of s e c t i o n 67-408, which l i m i t s t h e d u r a t i o n of
l e a s e s of a g r i c u l t u r a l l a n d s t o t e n y e a r s . There i s cer-
t a i n l y no d o u b t t h a t t h e l a n d s i n q u e s t i o n are a g r i c u l t u r a l
l a n d s and t h a t t h e r e n t a l arrangement d i d e x i s t . However,
w e f i n d t h a t by i t s t e r m s t h e lease r i d e r e x t e n d e d t h e
o r i g i n a l l e a s e f o r a term of t e n y e a r s and t e n y e a r s o n l y .
I t i s u n c o n t e s t e d t h a t t h e l e a s e r i d e r was e x e c u t e d on
F e b r u a r y 1 4 , 1969. A p p e l l a n t makes a n i s s u e of t h e f a c t
t h a t a p p r o x i m a t e l y one y e a r and s i x weeks w e r e r e m a i n i n g on
t h e t e r m of t h e l e a s e agreement on t h e d a t e of e x e c u t i o n of
the lease rider. This, it argues, supports i t s contention
t h a t t h e l e a s e r i d e r was t h e document i n e f f e c t f o r t h e
p e r i o d F e b r u a r y 1 5 , 1969 t h r o u g h A p r i l 1, 1970. On t h i s
b a s i s , a p p e l l a n t a l l e g e s t h a t t h e l e a s e r i d e r i s a l e a s e of
a g r i c u l t u r a l l a n d s f o r more t h a n t e n y e a r s . It i s inter-
e s t i n g t o n o t e , however, t h a t t h e l e a s e r i d e r , w h i l e a n
e x t e n s i o n of t h e o r i g i n a l lease agreement, c o n t a i n s t e r m s
and p a r t i e s s i g n i f i c a n t l y d i f f e r e n t from t h e o r i g i n a l l e a s e
agreement.
A s indicated previously, the consideration f o r the
l e a s e w a s i n c r e a s e d by t h e l e a s e r i d e r . This increased
c o n s i d e r a t i o n took e f f e c t on A p r i l 1, 1970, t h e d a t e t h e
l e a s e r i d e r became e f f e c t i v e . I n addition, the lease rider
c o n t a i n s a p r o v i s i o n g r a n t i n g Hubbard t h e p r i v i l e g e of
p l a c i n g a t r a i l e r house on t h e p r e m i s e s . T h i s p r o v i s i o n was
n o t contained i n t h e o r i g i n a l l e a s e agreement. Furthermore,
Margery Rumph i s a p a r t y t o t h e l e a s e r i d e r w h i l e o n l y
Hubbard and H u b e r t Rumph w e r e p a r t i e s t o t h e o r i g i n a l l e a s e
agreement.
By i t s t e r m s , t h e language of t h e l e a s e r i d e r i n d i c a t e s
c h a n g e from t h e o r i g i n a l l e a s e a g r e e m e n t . The i n i t i a l and
c l o s i n g p a r a g r a p h s of t h e document s p e a k t o "changes" i n t h e
original lease. The l e a s e r i d e r was c l e a r l y a n e x t e n s i o n o f
t h e o r i g i n a l l e a s e , b u t upon s i g n i f i c a n t l y changed t e r m s .
The c a s e i n v o l v e s a f i v e - y e a r lease w i t h a t e n - y e a r r e n e w a l
upon s u b s t a n t i a l l y changed c o n d i t i o n s . T h e r e i s no v i o l a -
t i o n of s e c t i o n 67-408.
The f i n a l i s s u e , No. 4 , i n v o l v e s p o s s i b l e w a i v e r o f
c e r t a i n r i g h t s by a p p e l l a n t . I n i t s f i n d i n g s of f a c t t h e
c o u r t d e t e r m i n e d t h a t a p p e l l a n t , i n a l l o w i n g t h e Rumphs t o
p l a c e s u b s t a n t i a l improvements upon i t s p r o p e r t y a f t e r
a p p e l l a n t p u r c h a s e d t h e same, waived i t s r i g h t t o
c o n t e s t t h e v a l i d i t y o r existence of t h e option.
The l e a d i n g c a s e on abandonment i n Montana i s Conway v .
F a b i a n ( 1 9 3 9 ) , 108 Mont. 287, 89 P.2d 1022. "~bandonment"
was t h e r e d e f i n e d a s :
". . . t h e r e l i n g u i s h m e n t of a r i g h t ; t h e
g i v i n g up o f something t o which o n e i s e n t i t l e d .
I n d e t e r m i n i n g w h e t h e r o n e h a s abandoned h i s
property o r r i g h t s t h e intention is the f i r s t
and paramount o b j e c t i n q u i r y . This i n t e n t i o n
i s a s c e r t a i n e d n o t o n l y from t h e s t a t e m e n t s
which may h a v e been made by t h e owner o f t h e
p r o p e r t y , b u t a l s o from t h e a c t s o f t h e owner
. . ." 1 0 8 Mont. a t 306, 89 P.2d a t 1029.
T h i s d e f i n i t i o n was r e c e n t l y a f f i r m e d i n McEwen v . Big Sky
o f Montana, I n c . ( 1 9 7 6 ) , 169 Mont. 1 4 1 , 545 P.2d 665.
The t e r m "abandonment" i s f u r t h e r e x p l a i n e d i n 1 Am J u r
2d Abandoned P r o p e r t y 81:
"The term 'abandonment' a s a p p l i e d t o p r o p e r t y
and p r o p e r t y r i g h t s h a s a c q u i r e d a w e l l - d e f i n e d
and t e c h n i c a l meaning which i s n o t t o b e c o n f u s e d
with t h e d o c t r i n e of laches o r estoppel. In its
g e n e r a l s e n s e , abandonment means t h e a c t of i n -
t e n t i o n a l l y r e l i n q u i s h i n g a known r i g h t a b s o l u t e l y
and w i t h o u t r e f e r e n c e t o any p a r t i c u l a r p e r s o n o r
f o r any p a r t i c u l a r purpose. Abandoned p r o p e r t y
i s t h a t t o which t h e owner h a s v o l u n t a r i l y re-
l i n q u i s h e d a l l r i g h t , t i t l e , claim, and p o s s e s s i o n ,
w i t h t h e i n t e n t i o n o f t e r m i n a t i n g h i s ownership,
b u t w i t h o u t v e s t i n g i t i n any o t h e r p e r s o n and
w i t h t h e i n t e n t i o n of n o t r e c l a i m i n g f u t u r e pos-
s e s s i o n o r resuming i t s ownership, p o s s e s s i o n o r
enjoyment. . ."
To e s t a b l i s h a n abandonment of p r o p e r t y , a c t u a l a c t s of
r e l i n q u i s h m e n t accompanied by t h e i n t e n t i o n t o abandon must
be shown. The p r i m a r y e l e m e n t s are t h e i n t e n t i o n t o abandon
and t h e e x t e r n a l a c t by which t h a t i n t e n t i o n i s c a r r i e d i n t o
effect. 1 Am J u r 2d Abandoned P r o p e r t y S15.
There i s no proof t h a t Dale Edwards, I n c . , ever intended
t o abandon i t s r i g h t s i n t h e l e a s e d p r o p e r t y . To t h e con-
t r a r y , i t never r e c o g n i z e d t h e v a l i d i t y of t h e o p t i o n , a n d ,
i n d e e d , i n 1973 f o l l o w i n g h e r h u s b a n d ' s d e a t h , Mrs. Dale
Edwards t o l d Margery Rumph t h a t "under no c i r c u m s t a n c e s "
would s h e e v e r want t o s e l l .
From t h e t i m e M r s . Edwards t o l d t h e Rumphs s h e d i d n o t
recognize t h e i r r i g h t t o exercise t h e option, t h e question
was n o t r a i s e d a g a i n u n t i l March 1977. A t that time, the
Rumphs s o u g h t t o e x e r c i s e t h e i r o p t i o n and a p p e l l a n t i m -
mediately refused t o do so. T h i s a c t i o n ensued.
The Rumphs' improvements c o n s i s t e d of c e r t a i n r e p a i r s
upon t h e l e a s e d p r e m i s e s . They w e r e e n t i t l e d t o do s o under
t h e i r tenancy. The r e p a i r s and improvements which t h e
Rumphs made upon t h e p r o p e r t y were n o t i n c o n s i s t e n t w i t h
t h e i r t e n a n c y and i n no way gave them any g r e a t e r r i g h t s i n
t h e land.
Under t h e s e c i r c u m s t a n c e s we f i n d t h a t a p p e l l a n t d i d
n o t waive i t s r i g h t t o c o n t e s t t h e v a l i d i t y o r e x i s t e n c e o f
t h e option t o purchase. B e t h a t a s i t may, t h i s i s only
h a r m l e s s e r r o r and c a n n o t b e a b a s i s f o r r e v e r s i n g t h e
D i s t r i c t Court. Halko v . Anderson ( 1 9 3 9 ) , 108 Mont. 588, 93
P.2d 956; H i l l v . Chappel Bros. ( 1 9 3 4 ) , 97 Mont. 305, 33
P.2d 819.
T h e r e f o r e , t h e summary judgment g r a n t e d r e s p o n d e n t s by
t h e D i s t r i c t Court i s affirmed.
W e concur:
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Chief J u s t i c e
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